Ben Shaevitz is senior vice president of loan origination at
Patch of Land and is responsible for leading the company’s
loan-production activities and supply-side partnerships.

Shaevitz has more than 13 years of experience managing
sales and customer acquisition in rapidly growing real estate
lending organizations, both startups and traditional banks.

Prior to Patch of Land, he led and managed a mortgage sales
team at PennyMac Loan Services as the company scaled up
to become the eighth-largest loan servicer in the U.S. Reach
him at (424) 903-1436 or ben@patchofland.com.

industry’s big picture still looks bright in the year

ahead. For the greatest advantage in that market,
however, loan originators should be well-versed in the
many new mortgage products available today that
could benefit a wide variety of borrowers, even in a
rising-rate environment.

Following are a few products originators should be
aware of:

n Low-downpayment mortgages: Mortgages
with loan-to-value ratios as high as 97 percent made
a comeback about three years ago. Originators

Mortgage interest rates are on the rise. This is presenting a new set of chal- lenges for mortgage originators and homebuyers who have become accustomed to historically low rates.

Although rising rates might slow home sales, a
growing economy and a healthy housing market
should provide some relief. Experts predict mortgage
rates will inch upward to about 4. 5 percent or possibly
near 5 percent by year’s end.

This rising-rate environment is expected to have a
negative impact on refinance volume. But mortgage
originators who prepare now for the changes will be
able to provide their customers with great opportunities to fund residential property purchases.

Strong signals

The Federal Reserve, as expected, bumped rates in
December of last year and again this past March and
June. The Fed’s policymaking body, the Federal Open
Market Committee, was scheduled to meet again in
July, after the deadline for this article. Analysts expect
the Fed to raise rates once more this year.

When the benchmark interest rate is raised, it generally is a signal that mortgage rates also are headed
upward. Rising mortgage rates can spur homebuyers
to act in an effort to lock in rates before they rise any
further, but constrained inventory and rising home
prices could dampen this incentive to act.

Housing prices posted strong gains this past March,
rising 7.1 percent year over year, according to the most
recent data available from CoreLogic. This included
double-digit growth in Washington state ( 12. 8 percent) and strong growth in Utah ( 9. 9 percent) and
Oregon ( 9. 4 percent). Prices in 27 states as of this
past March had surpassed peaks reached prior to the
housing crisis, and 10 states were within 5 percent of
their pre-crisis peaks. CoreLogic predicts that home
prices will rise another 4. 9 percent over the 12 months
ending in March 2018.

Although rising mortgage rates are a concern, low
unemployment, improved wage growth and generally
strong consumer confidence are working in the mortgage industry’s favor. Unemployment this past May
dropped to 4. 3 percent, the lowest level in a decade and
a mark that most economists consider to be near full
employment. Low unemployment fuels wage growth
as employers raise pay to attract workers, a positive
indicator for housing demand and affordability. The
potential for tax reform and reduced regulation also
bodes well for small businesses, which employ the
majority of Americans.

Loan-product offerings

Although there are challenges ahead, the housingshould learn what’s available because there aredifferences in qualifications and pricing amongproducts.

n Government-backed loans: U.S. government-guaranteed loans are viable options for low- to
moderate-income homebuyers who meet the
qualifications. Originators need to know these
programs inside and out and be able to tout their
benefits — such as zero downpayment requirements for U.S. Department of Agriculture and U.S.

Department of Veteran Affairs loans — as well as
the negatives, such as the mortgage insurance
requirement for the life of a Federal Housing
Administration loan.

n ARMs: Adjustable-rate mortgages, which
feature lower rates on the front end of the loan,
likely will gain in popularity as interest rates rise.

Originators should be prepared to offer this option
to clients and to explain how ARMs work. Potential
customers include those who expect to sell their
homes before the higher ARM rate kicks in and
buyers who want to invest their house-payment
savings elsewhere during the lower-rate period of
the ARM. These have been underutilized since the
housing crash, partly because of low rates. If rates
do rise, originators should be ready with several
ARM options.

n Unconventional products: Lenders are offering
a variety of products apart from 15-year and 30-year
fixed-rate mortgages and conventional ARMs. A
loan from a crowdfunded real estate lending website could be a viable option for a borrower wanting to invest in residential properties, for example.

Tune Up Your Product KnowledgeYou can grow your business in a rising-rate environmentBy Ben Shaevitz

Continued on Page 98 >>

Key PointsMortgage originator toolsMortgage originators have a range of toolsavailable to help them put creditworthy bor-rowers into sustainable mortgages. None of thatmatters, however, if borrowers can’t find them.Following are some ways originators can buildtheir business as rates creep upward.

n Be accessible online: Millennials — adults in
their mid-30s and younger — prefer to shop online, and these automated online processes can
lower the cost of producing mortgages. Independent originators should consider partnering with
a wholesaler that has robust financial technology
offerings.

n Build a network: Homebuyers often reach out
to a mortgage originator recommended by family,
friends or co-workers who have done business with
the originator in the past. Loan originators should
actively and regularly network with past clients
and find opportunities to meet new people.

n Inspire trust: Mortgages can be complicated. Mortgage originators who can answer borrowers’ queries
about downpayments, rate locks, points, closing
costs and other questions may hold an advantage
over competitors.

n Provide personalized service: Mortgage originators specialize in mortgages while banks have many
lines of business. Originators who provide specialized attention to each client will set themselves
apart.

n Educate potential customers: Many borrowers
and would-be borrowers don’t know that nonbank
mortgage originators may have access to a wider
variety of pricing and product options than traditional banks. Seek out ways to educate potential
customers about the benefits of this arrangement.